The Blog

The Succession Plan for Business Owners and Hiring Managers

CFO: What happens if we invest in developing our people and then they leave us? CEO: What happens if we don’t, and they stay?

I have no idea where this quote originated. What I do know is that I posted it to my LinkedIn profile and almost instantly received over a thousand likes and shares.

One would think I would be ecstatic to see so many rallying around the importance of investing in their people. And I am. However, sadly, this is not what I see when I’m talking with many SME owners and managers who, by the time they turn to me, seem to be looking for a magic bullet of sorts. They’re in pain you see because of not having a succession plan in place.

Many business owners are tired, frustrated and fed up. For good reason.

In 2006 the CFIB published an article which stated that fully 1/3 of independent business owners, mostly baby boomers, planned to exit their businesses within the next five years. That was of course before the real boom fell. Many of these owners’ exit plans are now pushed out by another ten or more years.

Add to that, less than half of these boomers have any sort of succession plan in place. And add to that the fact that less than one third of family owned businesses survive to the next generation. This clearly shows that the kids have either no interest, or more likely, they haven’t been properly groomed. Do you see where this road is leading?

Not having a succession plan — failure to hire and build right talent — is the number one reason businesses fail.

Not having a succession plan in place exposes your company to enormous risk. Even if your people are fully engaged and you boast about having very low turnover, you still need to prepare. People will leave, and that’s a fact. Spouses who have to relocate for career moves, competitors who woo them away, sudden illness, or worse, death, these are all very real possibilities. A succession plan that you can put into action is one of the best forms of business insurance you can have.

6 Steps to Your Succession Plan

This first exercise may be us much of a learning experience for you as it is your people. It is important to be delicate and not over commit. Launching a succession plan isn’t like launching a new brand. This is one example of how to test the water while moving forward at the same time.

1. Start with your org chart and mark each of the key positions that have real impact on your company. Under each position, without thinking about who is in the role now, list the top three qualities that are on your wish list of most desirable skills for that role.

2. On a separate piece of paper write down the name of each of your high potential employees across the top of the page. Under each list that employee’s unique values and qualities which make them valuable, regardless of the role they are in.

3. Pick one behaviour, value, skill or quality that most stands out about that particular person. Think in terms of where they most add value to your company.

4. Now go back to your org chart and see what other roles your high potential employees might also be suited to. Then list the areas that they need development in and notes about how this might be accomplished.

5. Meet with each of these key hires and review your ideas and analyze their response. You can set up appointments to discuss your next 5-year plan, what you are considering to put down on offer, and what you are looking for in return with those who have already demonstrated to you they are worth giving a shot. The process will take some time to put together properly. Holding regular meetings on a timeline is a proactive way to demonstrate your honesty to your people.

6. Mark the ones that are not ready and start taking steps to replace them with talented people who have ambition and loyalty to work through what it takes to develop themselves and build your company.

Slow is Good

Don’t make the mistake of listing one or two people as successors for too many positions. Remember they are going to have to handle their own jobs while simultaneously being groomed for a potential next role. So take it one person, one role at a time but always keep two people in mind.

Opportunities to experience one or two key aspects of the job at a time will prepare your people for real game experience, and let you see how keenly they step up to the challenge, or not. Shorter stints that grow into longer periods combined with debriefing and discussion can only help the ambitious improve.

On the other hand, if they’ve agreed to take this on, yet their attitude tells you otherwise, simply take them out of the role and replace them with your other (and not necessarily second) choice.

Watch Your Values Alignment

Culture and values alignment are always key to hiring and building your team. Personal values spill over into all companies. One thing all great wine makers share is the importance of values are how they spur us on to do courageous new things. Values set the tone and pace of how we build and grow our businesses.

Understanding your values, and that they are the cornerstone of your organization, must be turned into a clear and concise set of understandable concepts – that others can easily understand and set examples by. That’s not to say they won’t continue to grow and change. But you do need to be able to lead with and articulate them down through the ranks.

Let’s not forget, even the Godfather has his Consigliere.

The spark of inspiration will ignite drive and unity through your culture, values and operations only when your people truly apprehend and appreciate them. That’s not necessarily the easiest of tasks for anyone either — you’re going to need some help. Those in leadership often neglect they need assistance outside of their business to better their business.

Small changes have a big impact.

Developing your company starts at developing your culture and values and imprinting that on your operations.

• Work with a professional to hone your own understanding of what you believe your culture and values to be. • Consider your own participation in leadership development training. • Look at using an external consultant who can spot problems that you may have become blind to inside your organization. They’ll also bring much needed objectivity and innovative ideas from other industries to the table. • Consider developing a mentoring or leadership development program inside your organization.

Powerful companies are built on teams of people who aspire and believe in the culture and values of the organization and the leadership.

Culture and values are expressed through everything a person does. The way they reply to an email. How they greet clients and how well they do in your business. There is no magic bullet. But when we have a workable plan, breaking the process into bite-size manageable pieces, then each small win adds up to one great victory.